Your PF money will now be invested in Infrastructure Investment Trust (InvITS) and bonds as well. The Central Board of Trustees of the EPFO has given permission to invest up to 5 percent of the annual deposit in these investment instruments. The decision was taken in the board’s meeting on November 20.
Labor and Employment Secretary Sunil Barthwal said that the board has given us permission to invest in Alternate Investment Funds (AIFs). These include government-backed instruments category such as public sector INVITS. With this, the EPFO can get the benefit of diversification of investments. But experts believe that there is also a risk involved. However, the permission to invest in InvITS will depend on a case-to-case basis. This will be approved by the Finance Investment and Audit Committee.
Need to diversify EPFO funds
The central government had given permission to invest EPFO money in alternative investments earlier this year itself. But the notification was issued only after the last meeting of the board in March. Actually EPFO’s corpus is growing and there is a need to diversify its investments. On the other hand the infrastructure sector also needs long term funds. Accordingly, it can be beneficial for this sector as it gets money for long-term projects. Banks do not have the capacity to finance large infrastructure projects.
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What is InvITS?
InvIT is an alternative investment fund (AIF), which works like a mutual fund. InvITs gives infrastructure developers the option to monetize their assets under a single entity. SEBI regulates it. Apart from this, SME funds and social venture funds also come under alternative investment funds.
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